Tag: taxation

With growth from the gaming industry leveling off in most locations, many Native American tribes are now considering a brand new source of income in states where marijuana has been legalized, either medically and recreationally. As more and more states–including New York–legalize marijuana in one form or another, Native Americans will have a huge advantage over other retailers in the business: Tribal earnings are not subject to federal income tax laws, as long as they are earned on the reservation and are not distributed to individuals as earnings.

The Native American Tax Advantage

The advantages that would be enjoyed by Native American tribes for the sale of marijuana would be similar to the tax-exempt status they already enjoy in those states where gaming is conducted on reservations. 422 tribal gambling facilities in 28 different states earned $26.5 billion, $27.9 billion, and $28 billion from 2011 through 2013, none of which was taxable by the federal government.

Even if commercial activities are conducted on tribal lands, they are exempt from taxes, as long as they are not conducted by individuals. Individuals within the tribes are U.S. citizens and they can be taxed, which is why corporations are usually formed before embarking on a gaming enterprise, and why the same would likely be true of the marijuana business. The legal status of the corporation prevents any federal intervention or taxation on the income from gaming currently, and barring legislation that alters this status the same would be true of income generated from growing and selling legal marijuana.

Tribes must be careful, however, not to distribute earnings from gaming or marijuana sales to individuals as compensation for their work in the industry. These earnings can be taxed, but there is another federal law which comes to the individual tribe members’ aid in this situation. Earnings can be distributed to individuals as payments from a general welfare program that is earmarked for the needs of families and individuals, relative to health, food, and other essentials that are not related to compensation for services.

State Tax Laws

At the state level, Native Americans cannot be taxed on income that is generated from reservation resources unless that income is generated within the state but not within the boundaries of the reservation. In effect, this neutralizes attempts by state agencies to levy any kind of tax on the potential earnings of Native Americans from either gaming or marijuana growing. Marijuana grown on the reservation would thus be completely un-taxable in any state where it is grown.

As one might expect, this kind of exemption makes both the federal government and state governments very uneasy, and inclined to eye the legislation which currently grants such sweeping freedom from taxation very closely. As Native American enterprises begin entering the preliminary phases of entering the retail marijuana market and the media notes the enormous taxation advantages they would enjoy, federal agencies and state agencies are both taking hard looks at the situation.

It is hard to estimate exactly how lucrative the marijuana growing industry could be for Native Americans, but assuming it is on par with the gaming industry, a huge windfall would accrue to tribes all across the country. Some experts feel so strongly that they’ve said that growing marijuana could eventually eclipse the gaming industry as a source of income, and for tribes that have precious few sources of income on reservations, the allure of huge profits is likely to be overwhelming.

Childhood obesity is a complex issue, ad medical experts and social scientist have been in a gridlock about how to fix the problem for years. Now some economists argue that taxing junk foods could tip the scales in the right direction. One study by the University of North Carolina showed that a 10% price increase on soft drinks and pizza caused customers to consume far fewer calories from these items. A $1.00 price increase for soft drinks resulted in an average weight loss of 2.34 lbs. By manipulating prices through taxes, childhood obesity could be dramatically reduced or even prevented altogether. Increased taxation has already been proven effective at reducing rates of smoking in both teens and adults. Could a simple tax be all it takes to combat childhood obesity?

Taxation Of Sugary Foods – A Simple Start

One organization, Action on Sugar, has proposed a plan to target childhood obesity right where it starts. This plan outlines a reduction of sugars and fats in preprocessed foods, bans on marketing junk food to kids, bans on allowing junk food companies to sponsor sports, limiting availability and portion size of sugary drinks, and adding a sugar tax. This last item, the sugar tax, is a big deal. If junk foods are more expensive than healthier options, this will help steer consumers toward better choices at the grocery store. If apples were drastically less expensive than cookies, children might have a better shot at good health. Subsidizing healthy foods while adding taxes to refined and highly processed foods may help to set the prices where they need to be to prevent childhood obesity.

Junk Food Taxation Model Already Successful

Some countries, like Denmark and France, have already imposed a tax on unhealthy foods. Unhealthy foods have to be judged against a fixed standard in order for this tax to work. The tax needs to target the unhealthiest foods; an effective tax cannot be on total fat or carbohydrate content. It is important to focus the tax more specifically on sugars and refined carbohydrates, which have been found to be the most harmful contributors to childhood obesity, rather than on total percentages of fat and carbohydrates. Some complex carbohydrates and natural fats are important for health and even encourage weight loss. By following the example of Denmark and France, other countries could effectively battle childhood obesity using strategic taxation instead of dieting.

Taxation Versus Banning Foods

New York City’s former mayor Michael Bloomberg banned the sale of sodas larger than 16 ounces in his city. This proved to be an unpopular decision that evolved into a full-blown fiasco, and people were very upset about it. Taxation would be an easier way to steer people in the direction of healthier choices while still allowing consumers the freedom of choice. Taxation would simply make the healthier choice appear more attractive. One study published by the British Medical Journal suggests the target taxation amount should be about 20 percent and should apply to a variety of junk foods. Complementary subsidies on fresh produce would help bolster the positive public health effects of such a move.

Consider the Children

When deciding which laws and policies to put into effect, voters and lawmakers should consider what is best for the children. If implementing a tax on junk food can make a difference in childhood obesity–and the associated long term negative health affects like diabetes and heart disease–it should at least be consideration.

According to the New York State Department of Finance and Taxation, the remainder of all delayed refunds should be ready by “early August”:

The wait for state tax refunds has progressively grown longer, reaching 12 weeks and beyond this year, said Phillip Goldstein of CPA firm Goldstein Lieberman & Co. in Mahwah, N.J. He blamed the delay on state labor cutbacks.

“They have fewer people working there, which is holding things up,” Goldstein said of the state. “And this isn’t just a New York issue. We’re seeing this in every state across the board.”

Geoffrey Gloak, spokesman for the state Department of Taxation and Finance, cited the inexperience of a new vendor processing the returns, the New York State Industries for the Disabled.

“The tax department is assisting the vendor to both speed processing and provide quality assurance,” according to a statement issued by the department. “Recovery of the department’s costs associated with this effort and interest payments (to taxpayers) is provided for in the contract and will not come at an additional taxpayer expense.”

If you still haven’t received your refund from NY State, hopefully you will soon. Have you received your NY State refund yet? Let us know in the comments section below.

UPDATE:

“Where’s my refund”! Is a common cry from NY State residents these days, and according to the state for good reason. After using Bank Of America to process refunds for the last 18 years, BOA decided to get out of the tax business all together and did not renew their contract. So what was Albany to do? Outsource the job of course! These subcontractors and not-for-profit groups are backlogged with refund requests which is what is causing the delay for so many New Yorkers.

It has been nearly 3 months since the end of the tax season and all refunds should have been processed by now. Luckily, some NY taxpayers may be entitled to receive interest:

By law, interest is paid on refunds that are issued after May 30 for timely filed returns. Interest is paid only on that part of the refund resulting from over-withholding. To prioritize delivery of the delayed paper refunds, the tax department is assisting the contractor in both speeding up the processing and providing quality assurance. Recovery of the department’s costs associated with this effort—including staff overtime and interest payments—is provided for in the contract, and will not come at additional taxpayer expense, the tax department noted.

“In New York State, you’re required to pay interest 45 days after the filing due date of April 15, so beginning May 31 we’re paying interest on refunds,” said [NY State Department of Finance spokesmen Geoff] Gloak. “The interest goes back to April 15, so interest payments over time are provided for in the contract and won’t come at taxpayer expense.”

The majority of these delays are for taxpayers that filed a paper tax return as opposed to those who filed electronically, but there are still taxpayers out there that did file electronically waiting on their refunds. No surprisingly, residents are mad including Fred Slater; CPA at the NYC firm MS1040 LLC; particularly that private taxpayer data is being handed over to a third party:

“I have all kinds of questions about how much information they were given to process [tax returns]. In other words, you’re giving your private information to a third party. What were they given? The state is doing everything in its power to push people to efile, and they repeatedly contradict themselves on this, and force things. Not all of the returns are efile-able to start with, by their own system restrictions, and then they go through this process of pushing you to efile, but their system is not up to snuff.”